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Cash Flow; the most Important Part of any Business Decision

October 19, 2016

 At Magnolias, we tirelessly research business strategies to make sure we can offer our clients the most up to date strategic information. This being said, we know of only one strategy that stays constant in all economies, and in all businesses: Cash Flow Management.


Even though this seems like common sense, we see time-and-time where companies deviate from this basic principle. Overall, a company's ability to consistently generate positive cash flows from its daily business operations is a powerful tool that can be leveraged by every other aspect of business strategy. In addition, it is highly valued by lenders and investors. Cash flow is essentially the building block for any business.


In many cases, Magnolias Consultants look at the operating cash flow statement of a company to judge the cash flow health. Operating cash flow can uncover the company's true profitability. It can also identify inefficiencies on how businesses are using their cash. The results will then be used to help access other strategic business decisions.


To demonstrate this concept, it is important to look at examples and case studies. One of the most basic examples involves the decision to either purchase or lease a new property. Without considering tax implications of the country and region your business resides in, in almost all cases where small businesses have extra cash laying around, leasing preserves cash flow and cash reserves. Leasing also helps to manage risk and maintain cash liquidity. This being said, we still see business owners choose to purchase property over leasing all of the time.


We will take our clients through examples just like this, of what we have seen in the past ,and how the solutions either worked for positive or negative effect. When our extensive experience as business owners, operators and management consultants is combined with your companies knowledge, it will hopefully make your difficult decisions and complex business problems easier to make.


Please contact us if you have any questions regarding this topic, or if you would like to arrange a meeting to discuss further case studies.

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